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Debt-to-equity plan expected soon

China could allow industrial firms to convert their debt into equity stakes as early as next month, with the government now putting the finishing touches to a new plan, the official China Securities Journal reported on Monday. The newspaper said China's cabinet, the State Council, was currently finalizing plans to allow "firms in the real economy with development potential" to convert their debt into equity. Debt has emerged as one of China's biggest challenges, with the total load rising to 250 percent of gross domestic product last year. The International Monetary Fund warned in June that China's high corporate debt ratio of 145 percent of GDP could erode economic growth if not addressed.